Chapter 422

GENERAL PROVISIONS

422.101 422.101 Short title. This chapter shall be known and may be cited as Wisconsin consumer act — consumer credit transactions.

422.101 History History: 1971 c. 239.

422.102 422.102 Scope. This chapter applies to consumer credit transactions.

422.102 History History: 1971 c. 239.

422.102 Annotation Creditor’s Responsibilities and Duties Under The WCA. Holbrook & Bugge. WBB Feb. 1973.

422.102 Annotation Real Estate Implications of the WCA. Horton. WBB Feb. 1973.

422.102 Annotation The Effect of WCA on Farm Credit. Miller. WBB Apr. 1973.

subch. II of ch. 422 SUBCHAPTER II

MAXIMUM CHARGES

422.201 422.201 Finance charge for consumer credit transactions.

422.201(1) (1) With respect to a consumer credit transaction other than one pursuant to an open-end credit plan, the parties may agree to the payment by the customer of a finance charge not in excess of that permitted by subs. (2) and (3).

422.201(2) (2) 

422.201(2)(a) (a) The finance charge, calculated according to the actuarial method, may not exceed the equivalent of the total of the following for a consumer credit transaction entered into on or after April 6, 1980 and prior to November 1, 1981, other than by a federally chartered or state-chartered savings and loan association:

422.201(2)(a)1. 1. Eighteen percent per year on that part of the unpaid balance of the amount financed which is $1,000 or less; and

422.201(2)(a)2. 2. Fifteen percent per year on that part of the unpaid balance of the amount financed which is more than $1,000.

422.201(2)(b) (b) The finance charge, calculated according to the actuarial method, may not exceed the equivalent of the total of the following for a consumer credit transaction entered into prior to April 6, 1980:

422.201(2)(b)1. 1. Eighteen percent per year on that part of the unpaid balance of the amount financed which is $500 or less; and

422.201(2)(b)2. 2. Twelve percent per year on that part of the unpaid balance of the amount financed which is more than $500.

422.201(2)(bm) (bm)

422.201(2)(bm)1. 1. The finance charge, calculated according to the actuarial method, may not exceed the greater of the following for a consumer credit transaction entered into on or after November 1, 1981 and before November 1, 1984:

422.201(2)(bm)1.a. a. Eighteen percent per year.

422.201(2)(bm)1.b. b. A rate of 6 percent in excess of the interest rate applicable to 6-month U.S. treasury bills as determined under subd. 2.

422.201(2)(bm)2. 2. For purposes of subd. 1. b., the interest rate applicable to 6-month U.S. treasury bills for any month is the average annual discount interest rate determined by the last auction of the bills in the preceding month, increased to the next multiple of 0.5 percent if the average annual discount interest rate includes a fractional amount.

422.201(2)(bm)3. 3. Information regarding the amount of the maximum finance charge under subd. 1. for any month shall be available at the office of the administrator.

422.201(2)(bn) (bn) A consumer credit transaction entered into after October 31, 1984, is not subject to any maximum limit on finance charges.

422.201(3) (3) For licensees under s. 138.09 or 138.14 or under ss. 218.0101 to 218.0163, the finance charge, calculated according to those sections, may not exceed the maximums permitted in ss. 138.09, 138.14, and 218.0101 to 218.0163, respectively.

422.201(5) (5) For the purposes of this section:

422.201(5)(a) (a) The finance charge may be calculated on the assumption that all scheduled payments will be made when due;

422.201(5)(b) (b) The dollar amount of finance charge shall include the prepaid finance charge excluded from the amount financed; and

422.201(5)(c) (c) The effect of prepayment is governed by the provisions on rebate upon prepayment under s. 422.209.

422.201(6) (6) For the purposes of this section, the term of a consumer credit transaction other than one pursuant to an open-end credit plan commences with the date the credit is granted or, if goods are delivered, services performed or proceeds of a loan paid 10 days or more after that date, with the date of commencement of delivery or performance. Differences in lengths of months are disregarded and a day may be counted as one-thirtieth of a month.

422.201(7) (7) Subject to classifications and differentiations the merchant may reasonably establish, the merchant may make the same finance charge on all amounts financed within a specified range. A finance charge so made does not violate sub. (2) or (3) as the case may be if:

422.201(7)(a) (a) When applied to the median amount within each range, it does not exceed the maximum permitted by sub. (2) or (3) as the case may be; and

422.201(7)(b) (b) When applied to the lowest amount within each range, it does not produce a rate of finance charge exceeding the rate calculated according to par. (a) by more than 8 percent of the rate calculated according to par. (a).

422.201(8) (8) That portion of the finance charge consisting of an amount equal to a discount of 5 percent or less of the stated price which is offered to induce payment in full within a stated period of time in connection with a sale of particular goods and services for which credit is not otherwise available from the merchant shall not be included in the finance charge for the purpose of determining the maximum rate of finance charge under sub. (2) or (3) with respect to a customer who does not pay in full within such time.

422.201(9) (9) Notwithstanding sub. (2) or (3), a merchant may contract for and receive a minimum finance charge with respect to a transaction other than one pursuant to an open-end credit plan, of not more than $5 when the amount financed does not exceed $75, or $7.50 when the amount financed exceeds $75.

422.201(10m) (10m) A finance charge determined by application of a periodic rate shall be determined by applying the periodic rate to one of the following:

422.201(10m)(a) (a) The average daily balance of the account.

422.201(10m)(b) (b) The unpaid balance of the account on the last day of the billing cycle after first deducting all payments, credits and refunds during the billing cycle.

422.201(10m)(c) (c) The median amount within a specified range within which the unpaid balance as calculated according to par. (a) or (b) is included. A charge may be made under this paragraph only if the creditor, subject to classifications and differentiations the creditor may reasonably establish, makes the same charge on all balances within the specified range and if the percentage when applied to the median amount within the range does not exceed the charge resulting from applying that percentage to the lowest amount within the range by more than 8 percent of the charge on the median amount.

422.201(10s) (10s) Regardless of the date that an open-end credit plan is entered into, the parties may agree to the payment by the customer of a finance charge at any periodic rate.

422.201(11) (11) Anything to the contrary in this chapter notwithstanding, with respect to consumer credit sales and consumer loans secured by real property and insured or guaranteed by the federal government, or any agency or instrumentality thereof, this chapter shall not prohibit or limit any charges which are required by statutes, rules or regulations of such government, agency or instrumentality.

422.201(12m) (12m) This section does not apply to consumer credit sales of or consumer loans secured by a first lien on or equivalent security interest in mobile homes or manufactured homes, as defined in s. 101.91, if the sales or loans are made on or after November 1, 1981.

422.201(13) (13) A violation of this section is subject to s. 425.305.

422.201 History History: 1971 c. 239; 1973 c. 2; 1979 c. 10, 168, 176; 1981 c. 45, 100; 1983 a. 389; 1985 a. 29; 1987 a. 27; 1989 a. 56; 1991 a. 316; 1995 a. 328, 329; 1997 a. 35, 302; 1999 a. 9, 31, 53; 2007 a. 11; 2009 a. 177, 405.

422.201 Cross-reference Cross-reference: See also ch. DFI-WCA 1, Wis. adm. code.

422.201 Annotation The scope of apparent agency may embrace the making of a usurious loan. Hollingsworth v. American Finance Corp., 86 Wis. 2d 172, 271 N.W.2d 872 (1978).

422.201 Annotation The sale of an interest-bearing note at a discount is not usurious unless it is found to be a cloak or cover for what is in reality a usurious loan. Val Zimmermann Corp. v. Leffingwell, 107 Wis. 2d 86, 318 N.W.2d 781 (1982).

422.201 Annotation Accord and satisfaction is not a defense to a claim of usury under the consumer act. Clark v. Aetna Finance Corp., 115 Wis. 2d 581, 340 N.W.2d 747 (Ct. App. 1983).

422.202 422.202 Additional charges.

422.202(1) (1) In addition to the finance charge permitted by this subchapter, a merchant may bargain for and receive any of the following additional charges in connection with a consumer credit transaction:

422.202(1)(a) (a) Official fees and taxes.

422.202(1)(b) (b) Charges or premiums for insurance against loss of or damage to property in which the creditor takes a security interest or to property leased under a motor vehicle consumer lease or against liability arising out of the ownership or use of property in which the creditor takes a security interest or of property leased under a motor vehicle consumer lease, if all of the following conditions are met:

422.202(1)(b)1. 1. A clear, conspicuous and specific statement in writing is furnished by the creditor to the customer setting forth the cost and term of the insurance if obtained from or through the merchant and stating that the customer may choose the person through which the insurance is to be obtained.

422.202(1)(b)2. 2. The creditor mails or delivers to the customer a notice of the customer’s right to cancel the insurance obtained from or through the merchant in accordance with s. 424.304.

422.202(1)(c) (c) Charges in real property transactions as provided in sub. (2).

422.202(1)(d) (d) With respect to a consumer credit transaction which is other than one pursuant to an open-end credit plan and which is entered into on or after May 17, 1988, a charge not to exceed $15 for each check presented for payment to a creditor which is returned unsatisfied because the drawer does not have an account with the drawee, does not have sufficient funds in his or her account or does not have sufficient credit with the drawee.

422.202(1)(e) (e) With respect to a motor vehicle consumer lease, any reasonable fee or charge that is conspicuously disclosed in writing to the prospective lessee before execution of the motor vehicle consumer lease, is agreed upon by the lessor and lessee and is not prohibited by chs. 421 to 427 and 429.

422.202(2) (2) With respect to a consumer credit transaction which involves a manufactured home transaction as defined in s. 138.056 (1) (bg) or the extension of credit secured by an interest in real property, the parties may agree to the payment by the customer of the following charges in addition to the finance charge, if they will be paid to persons not related to the merchant, are reasonable in amount, bona fide and not for the purpose of circumvention or evasion of this subchapter:

422.202(2)(a) (a) Fees or premiums for title examination, title insurance or similar purpose;

422.202(2)(b) (b) Fees for preparation of a deed, settlement statement or other documents;

422.202(2)(c) (c) Fees for notarizing deeds and other documents;

422.202(2)(d) (d) Appraisal fees; and

422.202(2)(e) (e) Survey costs.

422.202(2m) (2m) With respect to an open-end credit plan, regardless of when the plan was entered into:

422.202(2m)(a) (a) A creditor may charge, collect and receive other fees and charges, in addition to the finance charge authorized under s. 422.201, that are agreed upon by the creditor and the customer. These other fees and charges may include periodic membership fees, cash advance fees, charges for exceeding a designated credit limit, charges for late payments, charges for providing copies of documents and charges for the return of a dishonored check or other payment instrument.

422.202(2m)(b) (b) For purposes of 12 USC 85, 1463 (g), 1785 and 1831d, both the finance charge under s. 422.201 and charges permitted under par. (a) are interest and may be charged, collected and received as interest by a creditor.

422.202(2s) (2s) 

422.202(2s)(a) (a) A creditor may contract for and collect from the borrower, or include in the amount financed, any of the following:

422.202(2s)(a)1. 1. Charges or premiums for consumer credit insurance, as defined in s. 424.201, consisting of consumer credit life insurance, credit accident and sickness insurance and credit unemployment insurance against loss of income of debtors resulting from either labor disputes or involuntary unemployment if all of the following conditions are met:

422.202(2s)(a)1.a. a. The insurance coverage is not required by the creditor and that fact is clearly and conspicuously disclosed in writing to the customer.

422.202(2s)(a)1.b. b. Any customer desiring the insurance coverage gives a specific, separately signed, affirmative written indication of the desire after receiving written disclosure of the cost and term of the insurance.

422.202(2s)(a)2. 2. Charges or premiums for insurance other than insurance described in subds. 1., 3. and 4., subs. (1) (b) and (2) (a) and s. 421.301 (20) (f) if all of the following conditions are met:

422.202(2s)(a)2.a. a. The insurance coverage is not required by the creditor and that fact is clearly and conspicuously disclosed in writing to the customer.

422.202(2s)(a)2.b. b. Any customer desiring the insurance coverage gives a specific, separately signed, affirmative written indication of the desire after receiving written disclosure of the cost and term of the insurance.

422.202(2s)(a)2.c. c. The creditor mails or delivers to the customer a notice of the customer’s right to cancel the insurance in accordance with s. 424.401.

422.202(2s)(a)3. 3. Charges or fees for future service contracts or motor club service contracts if all of the following conditions are met:

422.202(2s)(a)3.a. a. Membership is not required as a condition of the extension of credit.

422.202(2s)(a)3.b. b. The term of the membership does not exceed one year or the creditor mails or delivers to the customer a notice of the customer’s right to cancel the contract or membership in accordance with s. 424.401.

422.202(2s)(a)4. 4. Charges or fees for mechanical breakdown, extended warranty or maintenance service contracts or insurance if purchase of the contract or insurance is not required as a condition of the extension of credit.

422.202(2s)(a)5. 5. Other charges not constituting finance charges as approved by written opinion of the administrator or not disapproved under s. 426.104 (4) (b).

422.202(2s)(b) (b)

422.202(2s)(b)1. 1. Notwithstanding par. (a), in a consumer credit transaction other than one pursuant to an open-end credit plan, a creditor may sell and finance the products described in par. (a) 2., 3. and 4. without regard to the limitations contained in those subdivisions or in s. 424.301 (1) to (3) if the transaction is solely to purchase the products described in par. (a) 2., 3. and 4. and if the transaction is not evidenced by a credit contract that is signed by the customer on the same day as a contract evidencing any other consumer credit transaction with the creditor.

422.202(2s)(b)2. 2. Notwithstanding par. (a), in a consumer credit transaction pursuant to an open-end credit plan, a creditor may sell and finance the products described in par. (a) 2., 3. and 4. without regard to the limitations contained in those subdivisions or in s. 424.301 if the transaction is solely to purchase the products described in par. (a) 2., 3. and 4. and if the transaction is not evidenced by a credit document that is signed by the customer on the same day as the document evidencing consummation of the open-end credit plan.

422.202(3) (3) 

422.202(3)(a) (a) For purposes of chs. 421 to 427, any charge not authorized by this section shall be considered part of the finance charge. An additional charge authorized by this section but assessed in a manner inconsistent with this section is not part of the finance charge unless, except with respect to the charges under sub. (1), the creditor requires the charge as an incident to or a condition of the extension of credit.

422.202(3)(b) (b) Except as otherwise provided in chs. 421 to 427, assessing an additional charge which is not authorized by this section and which is not included by the creditor as part of the finance charge, or which is authorized by this section but assessed in a manner inconsistent with this section, is a violation subject to s. 425.304.

422.202(3)(c) (c) A merchant may not, in the same transaction, be subject to the penalty in s. 138.09 (9) (b), 218.0161 (1), or 425.305 and the penalty in s. 425.304, based on the assessment of the same additional charges.